Is it still necessary to opt for the life insurance?

in the Face of declining yields, the gap is widening between the best contracts and the less good.

in Spite of the erosion of yields and the blow of the penknife tax for subscribers to the better endowed, it is always the investment star of the French. In the first eight months of the year, they have paid again $ 95 billion euros on their life insurance contracts, of which 71% on the euro based funds without risk, after 132 billion euros by 2017, of which 72% on the funds in euros, however, penalized by the decline in interest rates.

With more than 1 700 billion euros of savings, life insurance has captured an increasing share of investors: 36.5% of households had at least one contract at the end of 2015, more than 45% among managers, and even more than 60% of the liberal professions, according to the Insee.

at this stage of maturity, the life insurance is no longer rising exponentially, as in the 1990s. "Gross inflows seems to have reached a ceiling of around 135 billion euros per year, it must no longer hope to see the 50 billion euros of net inflows in the 2000's", warns Cyrille Chartier-Kastler, founder of the society for the study Facts & Figures. As the French draw also in their contracts to fund their real estate projects or to supplement their retirement, while the remaining investments are passed on to the beneficiaries in case of death of the subscriber. These capital outflows have reached € 124 billion in 2017, but represent just 7% of the accumulated savings. It is far from a sign of rejection !

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The fund in euro, the pillar of stability

The decline in interest rates, which penalizes yet yields. These have been divided by more than two in ten years, falling from 4% in 2008 to 1.8% on average last year, according to Facts & Figures. While prescribers are urging investors to further diversify their investments to better preserve their purchasing power over the return of inflation to over 2% per year, nothing is. When they put money aside, 55% of the French prefer safety of their capital, and 71% of savers a clear preference for safe investments with low interest rates, according to a study of Odoxa for the broker Linxea.com.

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The fund in euros remains the pillar of stability of the life insurance. For investors it combines three essential qualities : security, availability and profitability. The savings placed in the fund, in euros, are handled by the insurer as its own money within its general assets. In return, this savings is re-evaluated each year with interest, which in turn produce other interests, in the following years. The capital may not decline, and the savings is available at any time.

The insurers have adapted their management to maintain yield. "Diversification has increased between 2015 and 2017," notes Cyrille Chartier-Kastler. The share of bonds was reduced (81.2% 82.5%), with nearly 60% of loans to private companies. The Greek crisis and that of the countries of the south of Europe at the turn of the years 2010 and has served as a lesson : insurers have been relatively more government debt to foreigners in their portfolios. The share has also increased somewhat, from 8.6%, while real estate rose from 5.2 to 6.5% of fund assets in eur classics.

Composition of the fund in euros

the assets of The fund in euros earn more than 3 % per year, of which 1.8 % distribuésaux investors. Source: Facts & Figures.

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The steering has allowed insurers to preserve the profitability of their assets, much less fallen than the returns distributed to investors. The investments of the fund in euro still reported as 3.14% in 2017, at 3.23% in 2016, according to Facts & Figures. By caution, a lot of insurers put a portion of their financial results in reserve, in the form of a provision for participation in profits (the so-called "PPB"), in which they can draw upon to improve yields in bad years. "The reserve has increased to 3.35% by the end of 2017, representing a doubling in five years compared to the level of reserves of 1.43% in 2012 and 1.72% in 2013," said Cyrille Chartier-Kastler.

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Know to go to the market

With earning assets of more than 3% per year, and additional provisions also representing 3% more performance in reserve, relative to assets, insurers retain a margin of manoeuvre to treat their best customers. To enjoy it, you need to know to go to the market, because the rate of the euro funds vary almost two-fold between the least good and the best contracts.

The company Facts & Figures class the life insurance contracts in three categories, "standard", "heritage" and "private bank" ; and by channels of distribution, depending on whether they are sold by banking networks, insurance companies, or advisors in wealth management. Contracts savings standard offer little diversification through the use of "house" funds. They have an in-course average of 18 900 euros with an annual collection of 1 380 euros per contract.

The collection averaged 6 550 euros per year with an average of 66 000 euros per contract on the segment of the savings assets. "These contracts offer all the units of compte reference to the market, for example, Comgest, Carmignac, DNCA, or the Financial of the Exchequer", explains Cyrille Chartier-Kastler. There are many options (rebalancing of savings, protection or enhancement of the capital gains...), and services management controlled (a predefined distribution) or under mandate (delegation of trade-offs to the manager). Finally, the collection medium approach 30 000 euros per year with a work-in-progress close to € 200 000 for contracts for private management, which have characteristics close to the contracts heritage but a clientele even more select.

returns double

Rate average euro funds in the life insurance segment of the market. Source: Facts & Figures.

The Express

standard contracts previously put forward by the banks are often the most disappointing, as Vivaccio La Banque postale (1.2% in 2017), Shades 3D des Caisses d'epargne (1.25% in 2017) or Forecast options of the Crédit mutuel Arkéa (1.2% in 2017).

a Lot of banks are launching regularly new contracts to crop more discreetly, the rate of their old life insurance policies, which fall into oblivion. For agricultural Credit, the rate of the contract Prédissime 9 was reduced to 1.3% in 2017, and the Confluence at only 0.75%.

Insurers and mutual saving the setting

The standard contracts of insurers and mutuals are more generous. If Multi life and book life of the Macif reported that there were only 1.2% last year, the rates were more correct for contracts as Winalto of the Maaf (1,85%) Arpeggios Axa (1,9% minimum) or Multéo of the GMF, which, in turn, applies a single rate to all its contracts (2.1% in 2017), which guarantees the same treatment to new customers as well as the most faithful.

For their part, the contracts of associations and small mutuals are distinguishable with yields double those of the standard contracts of the banks. Among them we can mention Capma-Capmi (2,8%), Gaipare (2,65%), Asac-Fapes (2,58%), Afer (2,4%), Agipi (2,1%), but also the Mutual Ivry MIF (2,5%), Amp Mutual (2,35%), AGPM (2,35%), or the MACSF with his contract RES mpt (2.4 per cent).

If the insurers and mutuals are saving the update, the poor profitability of the contracts of the banks, often in combination with the maintenance fees on high payouts, ends up discouraging investors. For the first time in 2017, their withdrawals have exceeded the payments on these standard contracts, with a décollecte of 7.3 billion euros, according to Facts & Figures. They now weigh less than half of the work-in-progress, compared to more than 60% of the savings in life insurance in 2009.

The trend is the diversification in units of account

The contracts heritage took over, in particular those distributed on the Internet. But, again, the funds in euros of the most ancient contracts show less good returns, as the fund Eurossima of Generali (1,77% in 2017), present on the historical contracts of most of the pioneers of the life insurance online (Boursorama Life, Altaprofits Life, ING Direct Life...). If many brokers now offer life insurance policies on the Internet, they are all based on the funds in euros to a handful of insurance companies : Generali, Suravenir (Crédit mutuel Arkéa), Swiss Life, Spirica (Credit agricole) and Apicil, social protection group has diversified into the distribution of investments. Home Altaprofits.fr, Linxea.com, Mes-placements.fr and Placement-direct.fr or other online brokers and "robo-advisors", the rate of their funds in euros were identical in 2017, according to the insurer on the contract chosen : 1,77% for Generali, 2% for Suravenir, Spirica and SwissLife, 2.25% for Apicil.

On the segment of the contracts, property and private management, the trend leads to a strong diversification in units of account (UA), that is to say, to the stock market funds and profiles, the investment promises (structured products) or real estate funds REITS and real estate mutual fund. Attracted by alternatives to the fund in euro to grow their economies, investors have placed in the last year 28% of their payments in life insurance in these units of account, bringing their work-in-progress to 336 billion euros, or 20% of the savings in life insurance. Thanks to the rise of financial markets, their performance are flattering.

In 2017, the brackets in the CPU have recorded a sixth consecutive year of increase, with an average gain of 6.1%, according to the French Federation of insurance (FFA), but 2018 might disappoint. "The French buy mostly CPU when it goes up, not by taste for risk", says the expert of Facts & Figures. The proportion of policyholders of life insurance in units of account has doubled in ten years, reaching 12.2% of the investors in 2018, according to the latest annual survey of Kantar-TNS, for the Authority of the financial markets. Even after this doubling, less than 1 investor on 8 holds a contract multi-media diversified with a portion in units of account, and especially among the more affluent.

winning Combinations

Paradoxically, to diversify its life insurance also allows you to get a better return on the funds in euros, as most of the insurers offer funds at subsidised interest rates under the condition to invest a certain proportion of his contract in units of account.

In Linxea.com for example, which offers contracts of several insurers, put 25% to 50% of his contract in CPU enables you to access a fund in euros related from 0.3 to 1% more than with the euro based funds without constraint. On contracts with Generali, the funds in euros Netissima reported 2.1% in 2017, with a minimum 30% of CPU, compared to 1,77% to the fund Eurossima. For contracts in partnership with Suravenir, as Lixea Future, it takes 40% of CPU to access the funds Suravenir opportunities (2.8% in 2017), much better than the euro funds Suravenir performance (2% in 2017). And in Spirica, in particular in the contract Linxea Spirit, put 50% in units of account allows you to invest up to € 50,000 in the fund's Euro allocation long-term, with a 3% yield in 2017, compared to 2% for the fund in euros classic.

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other adjust the rate distributed to policyholders according to the amount and the share of UC in their contract. At Swiss Life, for example, the rate of the fund in euros, 1.8% in 2017 to smaller contracts with less than 20% of the units of account, climbs up to 2.6% for those over € 250 000 with at least 60% in CPU. On the contract Darjeeling, of its subsidiary Placement-direct.fr the rate of the euro funds fell 2% to 2.8% according to the same criteria. Life insurance does lack decidedly not spring to treat his best customers.